freeupgrade

Was I the only one who thought Crandall's cost-cutting story was funny re: guard dog on Caribbean Island re: "don't feed the dog - he'll bark more - the dog can work 2 days a week and the thieves won't know which days the dog will be there...

I got a kick out of it....

sam123

As they said it, I was thinking maybe they meant to say excess baggage charges. Could have been a slip.

daggett24

$350 in excess baggage charge makes a lot more sense..

$350 for freight seems odd, you could add a row of seats down there, and make that up and then some..

FCfree

Doesn't AA-1's profit of $200 point out the basic problem at the legacy carriers? It would seem to me that there would be daily reports about how much each flight earned or lost. I'd keep track of that by the day, week, month, quarter and year. A flight that was consistently losing money, or making very little would be pulled or modified until it would make money. Isn't there any better way to utilize a 762 than to make $200? Sure, AA-1 is "legendary" route, but times change. If you can't make a profit doing something, it would seem foolish to try to make it up in volume. Maybe it should only be flown 4 or 5 days a week.

They showed an Allegiant Air jet at the TUL facility. Look at how Allegiant runs their airline and how their route map has expanded in the last few years (www.allegiantair.com)

Allegiant primarily makes runs from smaller markets to Las Vegas. Recently, they have added Orlando and Tampa using the same business model. Their market is the vacation market, where there are no $700+ one-way pax to make a profit on.

A while back, Allegiant announced service between Baton Rouge and Vegas. After selling tickets for a while, they determined that there wasn't enough demand. Before they flew the first flight, they cancelled it all, pulled out and gave refunds. While I'm sure that didn't sit well with pax, Allegiant made the right move in that they didn't waste time and money where they couldn't make a profit.

Further, Allegiant used to have service between Madison, WI and Las Vegas. When NW came in to compete with them, Allegiant pulled out. Again, if you can't make money, find another city pair to fly and put your equipment on a route that makes a profit.

There isn't another route that AA could use a 767 to make a profit of more than $200 per 5 hours?


Southwest was smart enough to keep the company healthy post 9/11, healthy enough to make a bet that was either smart, or lucky, or both. The bet could have gone against them. I wonder if they bought any oil contracts at $70+/bbl? If so, they are not looking so smart with oil now at $60/bbl. The bet cuts both ways.


It would have been interesting to see more info on the inner-workings of the war between the legacy carriers and the LCC's. While cost-cutting is important to keep AA's costs in line with WN's, there was no mention of the continuing battle to keep the price in line with the LCC's.

I think its great for AA if they have customers that are willing to pay $700+ for a one-way segment. Yes, there is value in a non-stop flight from point A to point B. And, the flight that they showed appeared to be completely full. What they didn't say was that some of those $50-100 seats might have been Priceline seats. And, what is hidden in the entire equation is the people that might have paid $400 to fly non-stop DFW-BDL, but wouldn't pay $700, so they went over to another carrier at a more reasonable price and made one stop through ATL, CLT or ORD.

Great show, but it continues to point out that there are some easy fixes that the legacies could do to make more money.

f9999

Me too, it was funny.

Though I thought that showed *exactly* what was wrong with Crandall's way of doing things. I was sort of thinking, hello -- you're in a third world country and that's your brilliant idea? Somehow I have the feeling that he's leaving out parts of that story, because it seems to me in the real world the quick result of that plan would be that the security guard gets cut from 7 days to 3 days a week, and not too long after the security guard's second cousin's buddy backs up a U-Haul on the day there's no security guard and there go your cost savings.

You could see a gleam in his eye - like the story was more interesting than the actual math. He wants to tell stories about cost cutting (like that stupid olives story) with no thought to the big picture (like the fact that if you cut some costs it's not productive in the long run).

rrgg

When they asked the couple how they get miles I expected a long list of crazy habits and partner earnings, but no, it's all about Citi.

In general the show didn't seem to get things quite right on the topic of Aadvantage.

mwhitted

Did anybody catch the part about AUS-DFW showing as sold out but AUS-LHR being available, including a seat on the "sold out" AUS-DFW segment? Doesn't this make even Expert-Flyer and SABRE useless for determining how many F seats might really be available for upgrades? They could show "sold out" if you just look at the AUS-DFW availability when in reality, they could be holding seats for connecting long-haul sale.

AyanO

I have no idea what the freight on that flight consisted of, but it being a NYC to LAX flight, it was most likely USPS mail, since they talked about how most of our mail travels on commerical flights. It was only on the little Miami segment did they mention the "Exotic" cargo like flowers, machine parts etc from Latin America...

So if it costs us .39 cents to mail a letter to LA that gets there in 3 days on average, and the postal service I believe runs a defecit each year, I'm wondering how much AA charges on average per letter, it must be in a .01 cent or lower ranger, if they only charged $350 bucks for surely alot of Cargo on that plane..

Also wondering how my USPS mail gets to europe, and i've recently sent things by airmail to Germany, Sweden and other places and it arrives in 3-4 business days, almost as fast as something going to LA..

Overall a great look at how the whole airline works, while us FlyerTalk junkies probably didnt get too much out of it, with only 10 minutes or so dedicted to AAdvantage, it was great to learn about how they rip apart and build back almost every plane on a 4year basis, and just how many miles(30 million??) i think that one 767 has flown in 20 years.. Or even in the 1 week of the show, I think that plane did 18 cross countryNYC to LAX/SFO, and a few Bermuda trips..

flipside

What they didn't say is how many people connected to Asia/Hawaii etc.. Maybe that flight only made $200 by itself, add all the connections and it's probably a different story.

iahphx

I agree -- it was Arpey's "coming out" party. He came across well: at least from a "human being" standpoint. I kind of wondered whether he might be "too nice a guy" to run a major airline. Hopefully, that's not the case. USAirways' Doug Parker is also a nice guy, but a tough competitor.

Overall, I thought Peter Greenfield did a good job with the show. Better than I expected. Sure, parts of it were simplified, but remember we're talking about a 2 hour show to a general audience. There were very few obvious mistakes -- which is remarkable to me given the generally woeful state of business journalism. I'm sure AA is pleased, as viewers probably picked up a great appreciation for the challenges of running a major airline. AA came across as professional, friendly and competent.

badjuju

That's what I thought too - he looked more like a Southwest passenger.

uncertaintraveler

I completely agree.

After he told the story, I also thought, "well, heck, why didn't he just sack the guard the first year and install the dog recording then--doing so would have saved him years of 'costs'." It left me wondering if it was a completely true story or just a partially-true semi-glossed-over story.

sdix

Good show. I'm glad I have TiVo - Cut a 2 hour show down to something more managable.

Couple of comments:

1.) I like Arpey. He came over as a pretty sensible guy.

2.) The Airlines really have to do something about freight screening. It is absolutley frightining that tons of freight is loaded daily with NO security check. Sure they have a list of "safe" shippers. How many did they say? 1.5 MILLION shippers!

3.) Seeing the baggage "kicker" in action sure makes me glad I carry on everything

f9999

Yeah the whole focus on profitability by single flight was sort of silly. There's no way to do that in a business that has such massive and hard to account for overhead. What's the ROI on the asset of the plane or how does the fact that some of the LAX passengers have paid for AC memberships factor in? Do you amortize every far-flung station in a standard way or just the NY and LA operations? And so on.

Obviously accountants do a good job of coming up with standard principles, but there's just no way to say "This flight made XX" unless you are strictly talking about variable costs only, which it seemed like they were not. As far as I could tell the point was to compare that flight with other flights, like the one that made 8k or so.

CloudCoder

Did anyone else think it was ironic when they were talking to two pax in coach? The big huge guy paid a lot more (and last minute) than the poor schmuck next to him. But the irony is that the big guy occupied a lot more space (including space from the other guy's seat).